A progressive economy is meaningless if growth does not produce a trickle-down effect.
Embarking on massive infrastructure projects is one strategy that the government of President Rodrigo Duterte is leaning on to spread the benefits of economic expansion.
Finance Secretary Carlos Dominguez III says along with other reforms such as the long-due modernization of the tax system and improvements in the ease of doing business, the Duterte administration envisioned the infrastructure program to reduce poverty incidence by a third of the 2015 level of 21.6 percent to just 14 percent by 2022.
“This will be the absolute measure of success of our strategy of inclusive growth. This is the goal that has been set for us by President Duterte, and this is how we are implementing it,” said Dominguez.
“We fully aspire to be the fastest growing economy in the fastest growing region in the world. This will not be an easy task to accomplish. But we are ready to meet the challenges, driven by the optimism of our people, the confidence of our development partners, and the leadership of President Duterte,” he said.
Aggressive public spending
Dominguez said the government would maintain fiscal discipline despite an aggressive public spending to keep the momentum of the “Build, Build, Build” infrastructure program, designed to fuel high—and inclusive—growth.
He said the Department of Finance and the Bureau of the Treasury would also ensure that the government’s borrowing policy remains cost-efficient to provide it with enough resources to fund infrastructure and other priority programs.
The country’s fiscal position “is strong” and “will continue to be so in the foreseeable future,” Dominguez said.
To maintain the momentum of the “Build, Build, Build” program, Dominguez said the economic managers slightly adjusted the deficit forecast from 3 percent to 3.2 percent through 2019.
“We assure our people that the government remains steadfast in its commitment to fiscal discipline. The improved revenue collections are channeled to productive spending that will clear the way towards inclusive economic growth,” Dominguez said during the latest meeting of the inter-agency Development Budget Coordination Committee in Manila.
Robust collections
Data released by the DoF on Aug. 11, 2018 showed that total revenues collected by the government in the first semester jumped 20 percent to P1.410 trillion from P1.176 trillion a year ago.
The Bureau of Internal Revenue collected P965 billion in the first half, up 14 percent from P848 billion on year. The Bureau of Customs raked in P279 billion, higher by 33 percent from P210 billion on year.
Expenditures, meanwhile, grew 21 percent to P1.603 trillion from P1.330 trillion a year ago.
Dominguez said to ensure efficient borrowing, this year’s goal of securing 65 percent of loans from the domestic market and 35 percent from external sources would be modified so that the government would now be targeting the proportion of domestic borrowing to increase to 75 percent, which would reduce the percentage of external financing in the mix to 25 percent.
“The larger proportion of domestic borrowing in the 2019 mix will help us better hedge against foreign exchange risks,” Dominguez said.
The aggressive spending will close the infrastructure gap with the Philippines’ neighboring economies, attract industrial investments, stimulate domestic economic activity, ensure that every community and every island participate in the mainstream of national wealth creation, and enable the country to take full advantage of regional economic integration within the framework of the Association of Southeast Asian Nations.